Oil Prices Decline in Anticipation of Upcoming OPEC Meeting
On Monday, the price of crude oil experienced a decline as investors awaited the upcoming meeting of the Organization of the Petroleum Exporting Countries (OPEC) later in the week to determine whether there would be an agreement to limit supplies into the following year.
Brent crude futures dropped by 39 cents, or 0.5 percent, settling at $80.19 a barrel by 0728 GMT, while U.S. West Texas Intermediate crude futures stood at $75.10 a barrel, reflecting a decrease of 44 cents, or 0.6 percent.
Both contracts saw a slight increase in the previous week, marking their first weekly gain in five weeks. This upward trend was supported by the anticipation that Saudi Arabia and Russia might extend voluntary supply cuts into early 2024, and discussions within OPEC+ could involve plans for further reduction, as reported by Reuters.
The scheduled OPEC and allies meeting, initially set for Sunday, has been postponed to 30 November.
Last week, prices experienced a decline when OPEC+ decided to postpone its ministerial meeting, aiming to resolve differences in production targets for African producers.
In October of the previous year, OPEC and its allies had agreed to cut oil output by 2 million barrels per day in November, marking the most substantial reduction by OPEC+ since the COVID-19 pandemic in 2020.
This decision was made despite pressure from the United States and other entities advocating for the group to increase its output.
In April, OPEC announced a “voluntary reduction” of 1.66 million barrels per day in its crude oil production, in collaboration with other OPEC members. The cuts were set to commence in May and extend through the end of the year, as reported by an official from the Saudi Ministry of Energy.
This reduction is in addition to the previously announced cuts by OPEC+ in October 2022, according to SPA.
In June, OPEC announced the extension of the production cut until 2024. This decision was made with consideration for the ongoing commitment of both OPEC and non-OPEC Participating Countries in the Declaration of Cooperation (DoC) to maintain a stable oil market and offer long-term guidance for the industry.
In October, the OPEC+ Joint Ministerial Monitoring Committee (JMMC) opted to keep the group’s output policy unchanged.
The decline in crude oil prices adds to the growing concerns for Nigeria, coming at a time when the country is grappling with significant revenue challenges, pipeline vandalism, and theft of crude oil in its oil-producing regions.
Last week, the Nigerian National Petroleum Company Limited (NNPC Ltd) reported that oil thieves had vandalized over 5,000 kilometers of oil pipelines connecting various parts of the country.
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Mele Kyari, the Chief Executive Officer of NNPC Ltd, revealed this information during his appearance before the Senate Committee on Petroleum (Downstream) last Tuesday. Kyari emphasized that the persistent vandalization of pipelines was causing substantial losses for NNPC Ltd, characterizing the situation as a ‘national calamity.’
“Over 5,000 kilometers of oil pipelines in the country are not working as a result of pipeline vandalism. Ten million liters of oil were lost from the volume pumped from Aba to Enugu at a time. The company has been unable to pump oil from Warri to Benin within the last 22 years and cannot connect to Ore.
“There is no amount of security measures that had not been taken to curb the crime without success, which, to us in NNPC Ltd, is substantially a national calamity,” Mr Kyari said.
